With bonds offering their juiciest yields in years, we queried some wealth management pros on where they see the best fixed-income opportunities now:
David Rossmiller, Bessemer Trust: We like longer bonds—10- to 30-year Treasuries—even though their yields are a bit less than the two-year, because these longer bonds have much more price sensitivity to a change in yield. If the 30-year Treasury bond yield fell 100 basis points from 3.9%, where it is today, the price of the bond would go up by over 17%. Add that to the yield, and the total return could be over 20%.
Adrianne Yamaki, Strategic Wealth Capital: For liquidity and safety, there are a ton of opportunities in short-term instruments. You can buy 12-month CDs at 4.5%, and if held to maturity, there’s no interest-rate risk.
Brian Gamble, First Long Island Investors: We’re seeing some attractive opportunities on the short end for corporate paper, with much higher coupons. And with the rising fed-funds rate decoupling a little bit from the 10-year Treasury’s yield, we’re also starting to consider extending duration to lock in some of these higher rates.
Hugh Nickola, GenTrust: We always recommend a mix of Treasuries, corporates, and tax-exempts, and my favorite now is the tax-exempts. At the very end of the curve, even for the most creditworthy names, you see close to 6% tax-equivalent yields for people in the highest marginal tax bracket. We don’t tend to go out that far…but even in the front end of the curve, you can get tax-equivalent yields well above 5%, even 6% and close to 7%, depending on a particular credit.
Voice of Moderation
Cyber Monday started the week as earnings season ended. Unrest in China and a flock of hawkish Federal Reserve officials drove down oil and stocks. But then Jerome Powell declared rate hikes could “moderate” as early as December. Stocks rolled. GDP hit 2.9%, inflation cooled, and job growth was robust—so stocks fell. But, on the week, the Dow edged up 0.24% to 34,428.95; the S&P 500 rose 1.13% to 4071.68; and the Nasdaq Composite was up 2.09% to 11461.50.
SBF, the Mea Culpa
Former FTX CEO Sam Bankman-Fried said he was broke and that he never intended to commit a fraud. Crypto lender BlockFi, which FTX rescued with a loan in June, filed for bankruptcy, then sued Bankman-Fried for
shares he allegedly promised as collateral. Investors withdrew $20 billion from crypto funds in November, and Bitcoin fell 16%.
Long-term Treasury yields fell below short-term bond yields by the most in 40 years, a recession red flag. Global bond yields also inverted for the first time in 20 years.
said Germany might be in recession as euro-zone inflation appeared to peak.
Blackstone’s Gating Problem
Blackstone limited redemptions in its Blackstone Real Estate Income Trust after investors sought to cash out. Barron’s first warned in early August about risk to the fund, which has a $69 billion net-asset value and posted strong returns as other real-estate funds flagged. Curbing withdrawals can hike selling pressure. Blackstone also sold 50% stakes in the MGM Grand Las Vegas and Mandalay Bay Resorts for $1.27 billion to
Pricing the Cap
The European Union debated a price cap on Russian oil, with hawks seeking a ceiling below the $65 a barrel favored by more dovish nations. Poland urged $20 to $30; $60 may suffice. Separately,
won U.S. permission for “limited” oil production in Venezuela.
Protests spread against China’s Covid policies and the leadership of President Xi Jinping. One spark: a high-rise fire in Xinjiang, in which the response was slowed by lockdown measures, resulting in 10 killed. Security forces suppressed the unrest, censors scrubbed the internet of protest images, and Chinese health authorities hinted at easing, while talking up vaccinations for the elderly.
Strike Averted, Xmas Saved
Four of 12 rail unions voted down a White House-brokered labor deal over paid sick days. The House and Senate quickly passed a measure to avert a pre-Christmas strike. Meanwhile, the Senate passed same-sex marriage protection legislation. And five Oath Keepers were convicted of various charges in the Jan. 6 insurrection; leader Stewart Rhodes and a lieutenant were found guilty of seditious conspiracy.
Annals of Deal Making
Elon Musk made angry calls to advertisers who exited Twitter. He specifically targeted
then made nice after a visit to Apple’s Tim Cook. Musk booted Kanye West two weeks after letting him back in.…
Royal Bank of Canada
said it is buying
Canadian bank for $10 billion…Horizon Therapeutics said it was in early takeover talks with
Johnson & Johnson,
Write to Robert Teitelman at email@example.com